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Earn a percentage of underwriting profits without assuming the risk
Underwriting profit options allow dealers to enjoy unused premiums from their F&I sales. Lemco Legacy supports most of the industry-standard Retro and Reinsurance structures and provides you with the guidance to help you select the best structure for your Dealership. As your F&I partner, we work closely with you to assess the needs of your Dealership. Based on our initial assessment, we recommend the best options, both traditional and innovative new ones, to help you maximize your underwriting profit.
Dealership size
F&I Production
Stockholder age
Investment strategy
Cash flow needs
Need for tax deferral
Retro Profit Participation
With this no-risk option, Dealers can participate in the underwriting profit without creating a new corporation. Through this structure, Dealers can get up to 100% of the underwriting profit from the provider.
Reinsurance Option
Reinsurance options fit well for Dealers that want the most tax-efficient financial structure with the intent to accumulate wealth over time. Controlled Foreign Corporation (CFC) is the most popular Reinsurance structure. It requires the Dealer to form a new corporation owned by the Dealer, domiciled family members or key employees. With the CFC structure, the Dealer has no risk, and the provider is directly obligated to the customer.
Dealer Owned Warranty Company (DOWC)
For more control over the critical aspects of the VSC program (Vehicle Service Contract), the Dealer Owned Warranty Company (DOWC) structure is a good fit. With the DOWC, the Dealer forms a separate "C" Corporation, the U.S. domiciled, that allows the Dealer to control every aspect of the service contract, from what coverage is offered, to what the rates are set. In this structure, all funds flow through the Dealer, giving them complete control over the cash and full transparency about where it is invested. For dealers looking for a hands-on approach, the DOWC provides a great way to manage their program.
Customized Dealer Owned Warranty Company
For Dealers that want to enjoy the tax benefits of the CFC and DOWC with a significantly lower cost of operation, we recommend this innovative new structure that combines the best of both worlds. This structure requires forming a U.S.-based "C" Corporation that eliminates the fees imposed by the foreign domicile of the CFC. Tax savings come from CPA-sanctioned accounting techniques that eliminate many of the fees charged by the CFC or traditional DOWC. This structure has been approved and sanctioned by some of the largest accounting firms in the U.S.
